Q2 2018 Investor Presentation - Linamar 2018 Investor... · Source: IHS Market Estimates for LV, CV Production. Industrial and Agriculture Markets utilize AEM, 3rd party analysts
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Linamar Corporation
Q2 2018
Investor Presentation
August 2018
2 © Linamar Corporation 2
Forward Looking Information, Risk and Uncertainties
Certain information regarding Linamar set forth in this presentation and oral summary, including
managements assessment of the Company’s future plans and operations may constitute
forward-looking statements. This information is based on current expectations that are subject to
significant risks and uncertainties that are difficult to predict. Actual results may differ materially
from these anticipated in the forward-looking statements due to factors such as customer
demand and timing of buying decisions, product mix, competitive products and pricing pressure.
In addition, uncertainties and difficulties in domestic and foreign financial markets and economies
could adversely affect demand from customers. These factors, as well as general economic and
political conditions, may in turn have a material adverse effect on the Company’s financial
results. The Company assumes no obligation to update the forward-looking statements, or to
update the reasons why actual results could differ from those reflected in the forward-looking
statements. Content is protected by copyright and may not be reproduced or repurposed
without express written consent by the Company.
Company
Overview
© Linamar Corporation 4
Linamar – A Global Powerhouse in Diversified Manufacturing
28,700 EMPLOYEES 60 MANUFACTURING FACILITIES 17 COUNTRIES
Diversified Manufactured Products that Power Vehicles, Motion, Work and Lives
2017 SALES: $6,546.5M ↑ 9.0% 2018 Q2 YTD SALES: 4,051.4M ↑ 18.4%
Normalized NE1– ATS: $551.5M (8.4%) ↑ 9.4% Normalized NE1– ATS YTD: $346.9M (8.6%) ↑ 10.9%
Transportation
Infrastructure
Power
Food
Water
Age
1Net Earnings (NE) Normalized is NE before unusual items and foreign exchange impacts from revaluation of the balance sheet, tax affected
© Linamar Corporation 5
Core Capabilities
CNC Expertise
Complex Assemblies
Advanced Automation
& Robotics
Hydroforming
Heat Treatment
Hatebur High Speed Hot
Horizontal Forging
Conventional Vertical Forging
Cold Forming
Ring Rolling
Radial Forging
Gravity & Low Pressure
Aluminum Die Casting
High Pressure Aluminum &
Magnesium Die Casting
Laser cutting
Metal Forming
Stamping
Painting
Robotic Welding
Assembly
MACHINING & ASSEMBLY FORGING LIGHT METAL CASTING METAL FORMING
© Linamar Corporation 6
Key Products
Engine Transmission
Body & Structural Driveline
Transportation Industrial
© Linamar Corporation 7
Scope of Operations & Market Concentration Q2 YTD 2018
Transportation
Engine | Transmission | Driveline | Body
AUTOMOTIVE
66.6%
OFF-HIGHWAY
2.2%
COMMERCIAL VEHICLE
3.6%
ENERGY, HEAVY MACHINING, MILITARY
1.1%
MARINE & RECREATION
0.6%
Industrial
Mobile Industrial Equipment | Fabricated Assemblies
ACCESS
17.6%
AGRICULTURAL
7.5%
MA
RK
ET
S
PR
OD
UC
TS
74.1% 25.9%
INDUSTRIAL
0.8%
© Linamar Corporation 8
Global Presence
August 2018
Facilities with IATF 16949
Facilities with ISO 9001
Facilities with ISO 14001
Facilities with OHSAS 18001
49
13
51
41
SPAIN BULGARIA
USA
CANADA
24
6
MEXICO 5
UNITED KINGDOM
FRANCE
GERMANY HUNGARY
Number of manufacturing facilities
INDIA
CHINA 24 1
4 1 1 3
4 4 7
Manufacturing Facilities (60) Sales Representation (15) Development Centres (8) Support Facilities (4)
© Linamar Corporation 9
2018 Market* Outlook
Source: IHS Market Estimates for LV, CV Production. Industrial and Agriculture Markets utilize AEM, 3rd party analysts and internal forecasts . Updated August 2018
LE
GE
ND
Ranking Score Growth Expectation
Decline 0.00 <-2%
Flat 1.00 Between -2% and 2%
Moderate Growth 2.00 >2%, <=5%
Growth 3.00 >5%, <15%
Strong Growth 4.00 >=15%
Automotive (LV) Commercial Truck Agriculture Skyjack
North America Flat Growth Moderate Growth Strong Growth
Europe Moderate Growth Growth Moderate Growth Strong Growth
Asia Flat Decline Moderate Growth Growth
2018Transportation Industrial
Note this is a MARKET outlook, NOT a prediction of Linamar’s
growth in each market. Growth is highly influenced by market
share growth expectations as illustrated on the launch and
market share slides in this ppt.
© Linamar Corporation 10
2019 Market* Outlook
Source: IHS Market Estimates for LV, CV Production. Industrial and Agriculture Markets utilize AEM, 3rd party analysts and internal forecasts . Updated August 2018
LE
GE
ND
Ranking Score Growth Expectation
Decline 0.00 <-2%
Flat 1.00 Between -2% and 2%
Moderate Growth 2.00 >2%, <=5%
Growth 3.00 >5%, <15%
Strong Growth 4.00 >=15%
Industrial
Automotive (LV) Commercial Truck Skyjack
North America Flat Flat Moderate Growth
Europe Flat Flat Moderate Growth
Asia Moderate Growth Decline Flat
2019Transportation
Note this is a MARKET outlook, NOT a prediction of Linamar’s
growth in each market. Growth is highly influenced by market
share growth expectations as illustrated on the launch and
market share slides in this ppt.
© Linamar Corporation 11
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Mar-17 May-17 Aug-17 Oct-17 Jan-18 May-18 Aug-18 Oct-18
2018 2019
Trend Review – Positive Trend in Outlook for 2018 and 2019 August 2018
© Linamar Corporation 12
Performance Highlights Q2 2018
Evolution Through Bold Innovation
Exciting new innovations launched at Skyjack
Telematics capabilities to help customers track assets, maintenance and usage
CVT transmission for telehandlers
VR Simulation for operator training
Gear Lab established at Centre in Guelph to support global gear and gear box growth
Innovation Hub designs for renovation complete, construction to begin in Sept between Centre & Powercor in Guelph
New Business Wins and quoting activity at record levels
$ NBW up 35% vs last year, launch book at nearly $4.5 Billion
Great growth internationally 66% of NBW ytd non NA
Great CPV growth in most regions despite soft customer production
Continued market share growth for Skyjack on booms and telehandlers globally
Strong first half for MacDon
Accountability & Global Bench
MacDon integration proceeding very well
Good momentum on global mindset on several fronts
New onboarding process launching in pilot mode
>600 apprentices globally and trend showing positive momentum
Systems & Simplify
Top line growth of 22%, normalized OE growth 20% despite soft NA auto markets
Outlook solid for another record year in 2018
Great progress in OWL and LMMS implementation
© Linamar Corporation 13
Key Investment Themes
• Sales & earnings growth consistent & well above market
• Double digit normalized earnings growth 8 years running
Consistent Performance
• We have demonstrated our ability to continue to grow through flat or declining markets and will continue to do so
Market Share Growth Key Growth Driver
• $8.5 - $9 billion sales secured for 2022
Strong Growth Secured for the Future
• Significant content potential in EV, Hybrid and ICE
• EV CPV converging with ICE CPV by 2022 -- ~$60 per vehicle globally for each
• Only 30% of powertrain outsourced – huge opportunity for extended time frame of growth, tech shift accelerating outsourcing
Massive Market Opportunity Vehicle Propulsion
• Access $10 Billion market, few players
• Ag market at early stage of cyclical recovery
• Actively growing market share in both businesses globally
Massive Market Opportunity Access & Agriculture
Strategy
Enterprise Strategy
Diversified Manufactured
Products that
Power Vehicles,
Motion, Work and
Lives
© Linamar Corporation 16
Global Addressable Markets:
Automotive
Commercial Vehicle
Off Highway Vehicles
Marine/Personal Trans/Rail
Infrastructure
Global Addressable Markets:
Scissors, Booms, Telehandlers
Hydraulics
Age
Global Addressable Market:
Medical Devices
Healthcare & Mobility
Home Care Technology
Wearable Technology
Water
Global Addressable Markets:
Irrigation Market
Water infrastructure
Access, Storage, Cleaning Man
ufac
turin
g an
d M
ater
ials
Dev
elop
men
t to
Sup
port
all
Mar
kets
Advanced Manufacturing
Artificial
Intelligence/Machine
Learning
Material Development
Vision 2100 – Building an Action Plan for the Future
Transportation
Power
Global Addressable Markets:
Electrical products, systems & services
Energy Markets – Oil/Gas, Solar, Wind
Energy Storage & Generation
Global Addressable Market:
Agriculture Harvesting, Seeding, &
Tillage Equipment
Food
© Linamar Corporation 17
Key Market Strategies
Transportation
Increase CPV in BEV, HEV, FCV
Mine opportunistic ICE market as volumes decline but addressable market increases
Grow integrated casting and forging business
Light weighting and noise reduction
Infrastructure (Skyjack)
Globalize and expand product lineup in all 3 regions
Food
Build on MacDon acquisition as the foundation from which to expand global ag business
overall
Power, Water, Age – research markets, develop strategy
Overall:
Expand Asian footprint
Focus primarily on Greenfield growth subsequent to Macdon acquisition with some smaller
acquisitions to enhance technology offering
Focus on Innovation to drive growth
© Linamar Corporation 18
TANGENTIAL
INNOVATION
PRODUCT
DEVELOPMENT
PROCESS
DEVELOPMENT
MATERIAL
DEVELOPMENT – LIGHTER, STRONGER
MANUFACTURING
PARTNERSHIPS WITH
TECH STARTUPS
DIGITIZATION
THROUGH AI/ML
Innovation
© Linamar Corporation 19
iHub – Construction Starting Sep 2018
Incubate innovation ideas
Explore tangential products & markets
Develop manufacturing partnerships
© Linamar Corporation 20
Digitization Through AI | ML
ADVANCED ROBOTICS
Development of advanced
collaborative robots to drive
more efficient and safer
automation
DATA COLLECTION
Creation of data
collection & analysis
systems to identify ways
to improve equipment
uptime, improve tool life
& reduce cycle times
VISION SYSTEMS
Evolving vision systems
to more accurately
gauge & inspect
products for better
product integrity
PREDICTION & ANALYSIS
Assessing other processes
of analysis & prediction that
can be more efficiently &
accurately done by
machine
ADDITIVE
MANUFACTURING (3D
PRINTING)
Identify applications
today (proto, tooling),
develop for future
production potential
© Linamar Corporation 21
60 2,590
1,788
2,189 823 Vision Systems
851
2 AGVs
1,164
Digitization with AI/ML
1,124 LMMS Data
Collection Connections
Traceability Read Stations
Connected Machines
Robots Traceability
Marking
Stations
RFID Stations
Plants
x10
August 2018
© Linamar Corporation 22
McLaren Engineering
McLaren Engineering
Development Centre,
Detroit, Michigan, USA Enhanced collaboration as
all Sales, Engineering, staff
to be located under one
roof
Advanced Gear Lab, Rapid
Prototype Manufacturing
Cell, Production Scale
Manufacturing Simulation
Cell
McLaren Engineering
Development Centre,
Crimmitschau, Germany Servo-controlled press
Dynamic torsional test
bench
Rotating bending test
bench
McLaren Engineering
Development Centre,
Guelph, Ontario, Canada Product Component
Development Engineering
CAD/CAE
Plant Support
Prototype Build
Management
Test and Validation
McLaren Engineering
Development Centre,
Wuxi Jiangsu, China Application, CAD,CAE for
Linamar engineering group
Transportation
© Linamar Corporation 24
Massive Opportunity in Outsourcing in all Propulsion Types
$500 Billion global market, addressable portion growing
each year
Addressable market consistently growing over next 20
years Significant content potential in EV, Hybrid and ICE
70% of content of powertrain captive but slowly being outsourced
Linamar is a technology leader in light weighting, noise reduction,
design optimization which is driving significant market share
Linamar is a leader in vehicle electrification initiatives in driveline
systems
Massive Market Opportunity
Vehicle Propulsion
© Linamar Corporation 25
Powertrain | Target Markets Significant and Growing
TOTAL GLOBAL POWERTRAIN / DRIVETLINE MARKET
Global Market 2017 2020 2030
Light Vehicle $378 B $408 B $435 B
Commercial Truck & Off Highway Vehicle $129 B $124 B $130 B
Total: $507 B $532 B $ 565 B
- Includes total system value for
engines, transmissions and
drivetrain
- Includes all material, VA
component machining and
assembly
- Includes all light vehicle system
production
- Commercial Vehicle (CV) and Off
Highway market size includes
value for systems >50 HP
Assumptions:
- Key competitors OEM’s themselves
- Handful of competitors with technical
expertise in these products, fewer still
with financial capacity
Competition:
- Increases variability of cost base
for OEM
- Machining and assembly highly
capital intensive – saves OEM
capital
- Outsourcing to an expert in that
process/product should result in
better technology, quality and
price
Drivers of Outsourcing:
Engine
Transmission
Driveline
Structural EV & Battery Housings
**Based on 2016 Segmentation
Source: I.H.S. Market Estimates for LV, CV Production. Off Highway uses Historical Power Systems Research/Manfredi Forecasts & Internal Estimates. Updated Q2 2018
© Linamar Corporation 26
Linamar’s Addressable Market Evolving Technology and Propulsion Outsourcing
Linamar’s Addressable Market is impacted by three long-term trends;
The shift from Internal Combustion Engines (ICE) to Hybrid Electric Vehicles (HEV) and
Electric Vehicles (EV)
Fuel Cell Vehicles (FCV) are another key technology that is in earlier stages of development but
could play a key role in the future
The degree to which the Propulsion Systems (or Powertrains) of those 3 architectures get
Outsourced to the supply base
The overall level of vehicle production/sales
© Linamar Corporation 27
Factors Influencing Future Production Levels
Autonomous Driving
• Enables segments not driving today i.e. seniors,
disabled, youth
• Better asset utilization to some extent
• Limited by peak demand needs ie
7am-9am, 4pm-7pm
Urbanization & Implementation of Urban Mass
Transit Infrastructure
• LRT
• Micro Transit
New Distribution Channels & Branding
• Online
• Stores vs Dealerships
• “Need to Have” Mentality
Ride Sharing
• Better asset utilization for those willing to share
a vehicle
• Enables segments not driving today i.e. seniors,
disabled, youth
Ride Hailing
• Less ownership & better asset utilization (limited
again by peak demand & level of ride
sharing)
• Age of vehicles reducing re higher standard of
vehicle condition
• Enables segments not driving today i.e. seniors,
disabled, youth
Growth in Middle Class
• Higher Disposable Income and a Wish for
Transportation
Global Population Growth
POSITIVE FACTORS
EXPECTED TO
OUTWEIGH
NEGATIVE ONES
Bloomberg Forecasts
a 1.8% CAGR in
Global Vehicles over
Next 25 Years
Source: Bloomberg New Energy Finance - July, 2017
© Linamar Corporation 28
Global Light Vehicle Production Advanced Consensus Projection
Source
I.H.S. Forecasting 2000-2025
Advanced Consensus Projection 2025-2030
i) 1% YoY Growth in overall industry volumes 2025-2030
ii) Production Share of Technologies by 2030 of ICE 50%, HEV 24%, EV 21%, Fuel Cell 5%. (Based on Consensus Average of External Industry Expert Forecasts for EV adoption, Updated August 2018)
Actual IHS Forecast Advanced Consensus
Projection
© Linamar Corporation 29
Powertrain Evolution
© Linamar Corporation 30
Cost Penalty of Electrification
Morgan Stanley – “Autos & Shared Mobility Suppliers: Transfer of Coverage: Auto 1.0 Still Has Gas in the Tank, Fading the Auto 2.0 Hype” – March 22, 2108
• Major hurdle to BEV is cost (and
weight) of battery pack
• No roadmap with current battery
technology to close the gap to cost of
ICE
• Value of E-Drive >70% of value of ICE
powertrain
© Linamar Corporation 31
Fuel Cell Vehicles
© Linamar Corporation 32
Preparing for the Future of Propulsion
Hybrid Vehicle
(HEV) Internal Combustion
Engine (ICE)
Electric Vehicle
(BEV) & Fuel Cell EV (FCEV)
Focus on Light Weighting, Fuel Efficiency,
Emissions Reduction solutions which offer a
unique value to customers.
Leverage global footprint, vertically
integrated capabilities and manufacturing
reputation to be benefit from increased OEM
Powertrain Outsourcing.
Linamar objective is to pursue content in all Propulsion categories in order to be well
positioned for multiple technology adoption scenarios.
Continue to increase Content Per Vehicle on
Hybrid Electrics as it will be an important
bridging technology to pure Battery Electric
Offer solutions focused on increased power
density, Noise Vibration Harshness (NVH),
light weighting.
Strong organizational focus on integrated
eAxle technology solutions
Provide Light Weight Aluminum and
Magnesium Body & Structural Castings
Look to augment eAxle offerings for Fuel
Cell Vehicle (FCV) applications, which could
play a key future role in market
© Linamar Corporation 33
ICE: Product Solutions
Engine
Transmission
Driveline
Full Transmission
Assembly
Shaft Full Clutch Module
Assembly
Full Clutch Module
Superstructure Assembly
Differential Case
Assemblies
Differential
Case PTUs RDMs Disconnecting
AWD Systems
Differential Housing &
Beam Axle Assemblies
Camshafts Camshaft /
Cylinder Head Cover Module Cast and Fully Machined
Cylinder Blocks & Heads Super cubed Blocks Lower Engine
Crankcase Assembly Pump Housings Brackets Full Engine
Assembly
1990s 2030s 2000s 2010s 2020s Content Potential / Vehicle
Outsourced %
Addressable Content Potential / Vehicle
$4,000
20%
$800
$4,000
32%
$1,280
$4,000
51%
$2,040
$4,000
75%
$3,000
$4,000
15%
$600
Structural & Chassis
© Linamar Corporation 34
ICE: Market Evolution
Updated August 2018
© Linamar Corporation 35
Hybrid: Product Solutions
Engine
Transmission
Camshaft / Cylinder
Head Cover Module
Cast and Fully Machined
Cylinder Blocks & Heads Super cubed
Cylinder Blocks
Complete
Gear Sets
Complete Niche
Transmission Assembly
Lower Engine
Crankcase Assembly
Fully Machined
Transmission Case
E-Assist Micro
Hybrid
Camshafts
Single Motor e-Axle
E-Axle & Driveline
Systems
Differential Case
Assemblies
Full Engine
Assembly Turbo Charger
Assemblies
Twin Clutch RDU
with Disconnect
1990s 2030s 2000s 2010s 2020s Content Potential / Vehicle
Outsourced %
Addressable Content Potential / Vehicle
$4,000
20%
$800
$4,000
32%
$1,280
$4,000
51%
$2,040
$4,000
75%
$3,000
$4,000
15%
$600
Structural/Chassis and EV Motor/Battery Modules
© Linamar Corporation 36
Hybrid: Market Evolution
Updated August 2018
© Linamar Corporation 37
BEV/FCEV: Product Solutions
Structural &
Chassis
EV Motor &
Battery Modules, Tank
Systems
Dual Motor e-Axle Single Motor e-Axle Commercial Vehicle
Solid Axle e-Power Unit
Multi-Speed
e-Gearboxes
Battery Tray Housings
Shock Towers Cast Chassis
Components
Electric Motor Housings
E-Axle &
Driveline Systems
IP Beam Structure
Pillars, Side & Cross
Members, Door Frames,
Structural Assemblies Centre Console
1990s 2030s 2000s 2010s 2020s
Outsourced %
Addressable Content Potential / Vehicle
$N/A
N/A
$N/A
$2,000
32%
$640
$2,000
51%
$1,020
$2,000
75%
$1,500
$N/A
N/A
$N/A
Content Potential / Vehicle
Hydrogen Storage Tank
© Linamar Corporation 38
EV: Market Evolution
Updated August 2018
© Linamar Corporation 39
Content Today on Electrified Vehicles Growing Quickly
Updated August 2018, estimates based on current projections and EV applications in market.
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
2015 2016 2017 2018 2019 2020 2021 2022
Global ICE, Hybrid & Electric Vehicle CPV
Hybrid
Electric
ICE
© Linamar Corporation 40
Technical Leadership in Process Innovation
Dramatic Lightweighting with Hydroformed Camshafts
© Linamar Corporation 41
Forgings: Lightweight Components Implemented
Minimizing material use through better designs – up to 40% reduction in weight
Future Wheel Hub Evolution – Integration & Connection
© Linamar Corporation 42
Innovation Management | Casting
Casting & Metallurgy
Metallurgic laboratory
Process Simulation
Sand and Coring
Imaging and Control
Virtual Reality
New Technologies Additive manufacturing
Virtual training
3D-Printed
Sand Package
3D interactive virtual environment ▲
Process Support
Sand & Metal Control
Vision Systems
Tomography ▲ X-Ray Automatic
defects recognition
X Ray
Tomography
CT Scanned
part vs. 3D
model
Material Engineering
Thermo-physical Simulations
Inorganic Coring
ICME Integrated Computational
Materials Engineering Residual stress during ▲
water quenching
New Product &
Process Simulation Casting & Core shooting simulation Defect Prediction
Examples of misrun and air entrapment detections ▲
© Linamar Corporation 43
Technical Leadership in Material Development
Replace Steel Stampings with Structural Aluminum Castings for Massive Weight Savings
© Linamar Corporation 44
Machining & Assembly: Propulsion of the Future
As the automotive landscape is rapidly changing, Linamar positions itself to adapt and
grow with it
Through innovative thinking and collaboration, we are leveraging our current
technologies and skills to help customers bring advanced vehicles to production
© Linamar Corporation 45
Technical Leadership in Product Innovation Leadership in Electrification -- e-Axle Project
• Reduced HV Cables
• Reduced Coolant Lines
• Reduced Vehicle Interfaces
• Improved Safety
• Superior Power Density
• Lower Overall Cost
Gea
rbo
x M
oto
r P
ow
er
Ele
ctro
nic
s
Fully Integrated eAxle System
© Linamar Corporation 46
eDrive Product Portfolio
Dual Motor E-Axle
70 to 220 kW
Torque Vectoring
Integrated Disconnect
Feature
Integrated Power
Electronics
Available with single or
multi-speed gearbox
Single Motor E-Axle
40 to 110 kW
Differential (open /
limited slip)
Integrated Disconnect
Feature
Integrated Power
Electronics
Available with single or
multi-speed gearbox
Micro Launch Assist E-Axle
15 to 30 kW
Differential (open /
limited slip)
Integrated Disconnect
Feature
Integrated Power
Electronics
Available with single
speed gearbox
Dual Motor Commercial
Truck 2 Speed
160 to 320 kW
Torque Vectoring
Integrated Clutch Feature
Integrated Power
Electronics
Beam Axle Cradle
2+ Multi Speed Gearbox
2-Speed gearbox
Differential (open /
limited slip)
Electric Dog Clutch
Disconnect with
Synchronizer
Parallel Gear
Architecture
WIN Q2
2017
500K
ANNUAL
VOLUME
© Linamar Corporation 47
A technology start-up partnership for Carbon Fiber Hydrogen Fuel Cell Vehicle storage tank solutions.
Next Generation Hydrogen Storage Tank
Low profile continuous tank shape
Lower-cost system
Seamless design
Continuous manufacturing
Industry standard materials
Standard Design Vs. Volute Tanks
25% more space efficient than standard cylinders
Smaller profile means tank can fit more efficiently in vehicle in a variety of spaces
More surface area (more chambers) makes thermal management easier -- precooling requirement reduced or eliminated and faster fill
Less carbon fiber usage
Volute Hydrogen Storage Tank – Manufacturing Partnership
© Linamar Corporation 49
Driveline Technologies: Commercial Truck Applications
Class 8 Tandem Axle Application
Q2 2017 New Business Win: Rear Drive Unit
Axle System New business win in Q3 for a Commercial Truck application
Rear differential axle unit
30,000 annual volume
Utilizes disconnecting technology to disengage the torque input to the
secondary axle when the power is not required, reducing parasitic
losses and improving fuel economy
A new business win in Q2 of 2017 that highlights the advanced engineering capabilities
within Linamar’s Driveline product group.
© Linamar Corporation 50
Ice
Advanced R & D
• Vehicle-to-vehicle communication (V2V or V2X COM) is a technology where vehicles, within certain proximity can communicate to each other
over DSRC (Dedicated Short Range Communication) wireless networks. The V2V COM will be an important technology in autonomous vehicle
(AV) execution by delivering information to vehicles in a near field for keeping appropriate distances while braking, accelerating, lane change, etc.
• Similar communication signals can be sent for the following events
• Actual Yaw rate exceeding theoretical yaw rate
• Sudden steer angle input
• Windshield wiper activation
• AWD connection or lock
• Sudden braking or ABS event
• Grade detection (throttle position vs engine load)
• Rough road detection (accelerometer)
Asphalt
V2X Connected Car Technology for Smart AWD Capability
© Linamar Corporation 51
Creating the Future | Protean MOU
Kwok-Yin Chan
CEO, Protean
© Linamar Corporation 52
Launch Review Q2 2018
Launching nearly $4.5 billion of new work today
($ Millions)
© Linamar Corporation 53
Launch Review Q2 2018
Launching nearly $4.5 billion of new work today
($ Millions)
© Linamar Corporation 54
Launch Review Q2 2018
Offsetting launching sales is business leaving each year of 5-10% of overall sales
$ M
illio
ns
Sales from Launch add: $700 to $800 Million in 2018
$1.2 Billion to $1.3 Billion in 2019
© Linamar Corporation 55
Content per Vehicle 2013 – 2018
Infrastructure
© Linamar Corporation 57
Mobile Equipment Market – Product Mix
Source: Skyjack Internal July 2018
© Linamar Corporation 58
Mobile Equipment Market – Geographic Mix
Source: Skyjack Internal July 2018
© Linamar Corporation 59
Access – Target Market Large with Limited Competition
Skyjack Internal Estimates – Final Q4-2017 Result
JLG
Genie
Haulotte
Manitou
Skyjack
2017 Global Market of $7.6B USD Massive Market
Opportunity in Access
© Linamar Corporation 60
Overview
Maintain and Defend Scissor Share….
98% market product range coverage by product type by 2020
Grow Boom Products…
95% market product range coverage by product type by 2020
Competitive Telehandler Offering…
94% market product range coverage in NA by 2019
Growth Strategy
Updated - PB
Food/Agriculture
© Linamar Corporation 64
MacDon – Company Snapshot & Acquisition Highlights
• 1949
Founded
• Winnipeg, Manitoba, Canada
Headquarters
• Sells to over 40 Countries
• Offices in Canada, U.S., Brazil, Russia, Germany and Australia
Geographic Footprint
• ~1,200 in North America
• 200+ Internationally
Dealer & Distribution Network
• 1,400 employees and management team with 100+years of cumulative experience at MacDon
Employees & Leadership Team
• Rigid and Flexible Draper Headers and Self-Propelled Windrowers
Key Products
Historical Financials
• ~1 million square feet total
• 11 owned and 6 leased, all manufacturing in Winnipeg
Facilities
(in C$ mm’s) LTM(1)
Revenue ~$600
EBITDA(1) ~$150
• Longstanding OEM relationships
• International distribution network
• Over the past 5 years MacDon has experienced:
– Sales of C$550 to C$650 million
– Strong earnings
– LTM Sales of ~$600 million
ACQUISITION HIGHLIGHTS - $1.18 billion transaction value - Immediately accretive
- Fully committed financing - Closing Q1 2018
© Linamar Corporation 65
Acquisition Well Aligned with Linamar’s Strategy
MacDon is an Innovative Market Leader Industry Leading Businesses and Market Share -- #1 market share in its key products
Track Record of Technology and Innovation Leadership Technology supported by over 100 unique patents with an additional 30+ unique patents pending globally, and a permanent technology-
focused staff of 110
Significant opportunity to leverage these strengths with Linamar’s global manufacturing expertise in LEAN principles through employee
engagement
✓
Attractive, well aligned strategic acquisition
Significant Growth Potential and Upside Opportunities
Agricultural Market in Early Stages of Cyclical Recovery
Large untapped addressable global market opportunity
Synergies with global distribution networks
Enhances Position as a Global Diversified Manufacturer
Agriculture/Food is a key long term growth market globally given the growing & developing global population
Linamar has a long history in the agriculture market
Further diversifies Linamar beyond traditional automotive powertrain / driveline manufacturing
Financially Attractive Deal
Strong, well-managed company with excellent financial performance and outlook
Fair price
Immediately accretive to earnings and cash flow even before synergies
High single digit accretion to Linamar’s expected 2018 and 2019 EPS and cash flow
Maintaining strong balance sheet with rapid deleveraging post-transaction
✓
✓
✓
Diversification
Innovation
Growth
Attractive Deal
© Linamar Corporation 66
MacDon – Product Portfolio
Mower Conditioner
Attached to a self-propelled windrower or combine
Used to cut and process crops through combine feeder house or left in field for further curing
Predominantly used for harvesting soybeans, wheat, canola, rice, oats, dry edible beans and
flax seed
Self-propelled harvesting machinery used with a header to cut and lay crop in the field
Popular in hay and forage, cereal grains, canola, and regions where growing seasons are
short and crops are harvested while damp
Attached to front of a combine
Used to pick-up crop that has previously been “windrowed”
MacDon pick-ups renowned for functionality and durability
PW8 fits multi brands with face plate (increases resale value)
Includes: Auger Headers and Rotary Disc Headers for Self-Propelled Windrowers, and two
types of Pull-Type Mower Conditioners
Primarily maintenance and replacement parts for the Company’s large installed base
Bolstered by acquisition of Westward Parts in 2012
Rotary Disc Header
Draper Headers
Product Description
Self-Propelled
Windrowers
Pick-Ups
Hay Products
Aftermarket Parts
© Linamar Corporation 67
MacDon’ Industry Leading Business and Market Share
Combine
FlexDraper®
Headers
Rigid
Draper
Headers
Self-Propelled
Windrowers
(mid-horsepower)
Estimated Market Position
North American
#1
#1
#1
Strong Market Position in Key Product Categories
© Linamar Corporation 68
Strong Brand Recognition and Farmer Loyalty
Drives Powerful Customer “Pull” Dynamic
Results in a Strong “Pull” Dynamic – Farmers Demand MacDon Products from Dealers
69 year history working hand-
in-hand with farmers and
dealers
Deep understanding of
farmers’ needs
Farmers know and value the
quality, durability and
reliability of MacDon
products
MacDon equipment
considered “best-in-class”
Superior reputation among
farmers for specialized
harvesting equipment
Over 1500 touch points
globally with dealers and
distributors
Ongoing, active dialogue with
dealers through a variety of
shows and programs
Regularly participate in
industry events,
conferences and equipment
shows, globally
© Linamar Corporation 69
Complementary Product Lines
Grain Harvesting
Corn
Headers
Sunflower
Headers
Draper Headers
/ Grain Tables
Hay
Harvesting
Pick Up
Heads
Rotary Mower
Headers
Combined business covers a wide crop range of Header Harvesting product lines
© Linamar Corporation 71
Equipment Sales vs Cash Receipts
© Linamar Corporation 72
Equipment Sales vs Cash Receipts
© Linamar Corporation 73
Agriculture Strategic Road Map
Regional Growth
Initiatives
Advanced &
Disruptive
Technologies
Product Line
Diversification
Global Parts
Distribution Strategy
Laser Focus on
Operations
© Linamar Corporation 74
Technology and Innovation Leader
Continuously Setting the Standard in Specialized Harvesting Technology
Technology supported by over 100 unique patents with an additional 30+ unique patents pending globally, and a permanent
technology-focused staff of 110
Higher cutting speeds
Structural changes to improve
manufacturability, maintainability, durability,
and reliability
Improved cutterbar visibility
Reduced seed loss
Higher capacity (improved efficiency)
Industry leading road speeds
Improved crop flow and windrow formation
Improved lift and float of headers
Structural changes to improve
manufacturability, maintainability, availability,
and reliability
Improved operator comfort and interface
Market leading transport system
Broader range of conditioning options
Structural changes to improve
manufacturability, maintainability, durability,
and reliability
Improved crop flow and windrow formation
Improved performance in challenging
conditions
FlexDrapers® & Rigid Drapers Self-Propelled Windrowers Hay Products
Water, Power
and Age
© Linamar Corporation 76
Strategy Development
New markets we are trying to gain more knowledge around
Established Advisory Councils to help us understand markets and develop strategies for
entry
Water, Food, and Age Management Segments
Each council contains a diverse mix of outside experts (top management, academics,
consultants, etc.) and Linamar leadership
Specific agenda items utilize each member’s expertise and creativity tying to something we
can pursue as a business case Water
Linamar Outside
CEO University Experts
CTO Segment Consultants
Engineering Expert Private Equity focused on
Segment
Corporate Development Top Managers in Segment
Age Management
Linamar Outside
CEO University Experts
COO Segment Consultants
CTO Private Equity focused on
Segment
Business & Corporate
Development Top Managers in Segment
Food
Linamar Outside
CEO University Experts
CTO Segment Consultants
Business & Corporate
Development
Private Equity focused on
Segment
Top Managers in Segment
© Linamar Corporation 77
A technology company partnership for built-in suspension wheel systems, developing the most energy-efficient and shock-absorbing wheel system in the world.
In-Wheel Suspension System
Patented energy-efficient, shock-absorbing wheel design with built-in suspension
Suspension arms inside rim designed to absorb energy from obstacles
Includes wheelchairs, bicycle, and automotive applications
Linamar manufacturer for mass production
Supply Agreement complete for wheelchair & bicycles
Benefits
Significantly improved ride comfort & road safety from bumps & potholes
Improved efficiency compared to frame suspensions
Enabler to reduce significant maintenance costs
Enables use of solid polymer tires in lieu of pneumatic tires
Eliminates flats tires and reduces rim damage (reduces +70% of maintenance)
Designed to fit with no modifications required to bikes & wheelchairs
Softwheel
© Linamar Corporation 78
1. In-wheel Suspension
SoftWheel’s 3 suspension arms
are built inside the wheel rim,
equidistant around a central hub.
2. Adaptive Rigidity
Our smart suspension
technology keeps the arms
rigid on flat terrain but when
encountering obstacles, they
compress to absorb the shock.
3. Rapid Shock-Reset
After impact, the 3 suspension
arms reset quickly, absorbing
almost all of the shock
immediately. 4. 360 degree Suspension
The unique structure of the
suspension mechanism enables
to absorb shocks from every
direction.
Changing the life of wheelchair riders:
Freedom and reduced back pains Less maintenance and better riding
experience for bikes
Financial
Review
© Linamar Corporation 80
Yearly Sales Growth 2013 – 2018
© Linamar Corporation 81
Normalized Net Earnings Attributable to Shareholders1 2013 - 2018
Net Margin Expectations 2018: 7.0% - 9.0% 1Net Earnings (NE) Normalized is NE before unusual items and foreign exchange impacts from revaluation of the balance sheet, tax affected
© Linamar Corporation 82
Non-Cash Working Capital 2013 - 2018
© Linamar Corporation 83
Operational Capital Expenditures 2013 - 2018
Capex as % of Sales – Normal Zone to Drive Double Digit Growth 6-8% of Sales
© Linamar Corporation 84
Net Debt to Proforma EBITDA Average¹ 2013 - 2018
¹ Proforma EBITDA includes last 12 month rolling EBITDA on acquisitions
Note: The current quarter peer group average is the most publicly available data upon release date.
© Linamar Corporation 85
Debt to Capitalization 2011 - 2018
© Linamar Corporation 86
Return on Capital Employed 2013 - 2018
© Linamar Corporation 87
Outlook Strong for the Future Q2 2018
$ M
illio
ns
Target
-
2,000
4,000
6,000
8,000
10,000
12,000
2012Actual
2017Actual
2022Estimate
Sales by Region
North America Europe Asia Target - Business to be Booked
© Linamar Corporation 88
Key Investment Themes
• Sales & earnings growth consistent & well above market
• Double digit normalized earnings growth 8 years running
Consistent Performance
• We have demonstrated our ability to continue to grow through flat or declining markets and will continue to do so
Market Share Growth Key Growth Driver
• $8.5 - $9 billion sales secured for 2022
Strong Growth Secured for the Future
• Significant content potential in EV, Hybrid and ICE
• EV CPV converging with ICE CPV by 2022 -- ~$60 per vehicle globally for each
• Only 30% of powertrain outsourced – huge opportunity for extended time frame of growth, tech shift accelerating outsourcing
Massive Market Opportunity Vehicle Propulsion
• Access $10 Billion market, few players
• Ag market at early stage of cyclical recovery
• Actively growing market share in both businesses globally
Massive Market Opportunity Access & Agriculture
www.linamar.com Thank You Linamar Corporation
@linamarcorp
Linamar Corporation
@linamarcorp
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